This post has been updated.
The Teamsters union called Tuesday for health-care giant McKesson to take back millions of dollars in incentive pay from chief executive John H. Hammergren, citing damage to the company's reputation caused by its role in the opioid crisis.
In a letter, Ken Hall, general secretary and treasurer of the International Brotherhood of Teamsters, urged the company's board of directors to use its “executive clawback policy to recover all or a significant portion of CEO Hammergren's incentive pay” over the past year and suspend future payouts until it restructures its compensation system. He also suggested that the board investigate rescinding incentive pay for other executives.
Hall said the Teamsters pension and benefit funds have more than $100 billion in assets and are “significant” owners of McKesson stock. A union official estimated that the funds own one-tenth of 1 percent of the mammoth health-care company, which this year was listed as the fifth-largest corporation in the United States.
Hammergren is regularly among the highest paid leaders of U.S. companies and has topped compensation lists for health-care chief executives. In the letter, Hall asserted that Hammergren has received $368 million in “realizable compensation” over the past five years. That includes salary, bonuses, pension and other awards.
In a statement to the Washington Post Tuesday evening, McKesson said that it is just part of the supply chain responsible for the flow of opioids, which also includes doctors, pharmacists and drug manufacturers. It said that close coordination by those groups is needed to solve the problem of opioid diversion.
The company said it has "strong programs and processes in place to stop the shipment of controlled substances to pharmacies with suspicious ordering patterns. We have dedicated teams of employees that use advanced technology and analytics to monitor, identify and investigate pharmacy orders."
Hall's letter cited McKesson settlements with the Drug Enforcement Administration in 2008 and 2015 over accusations that it did not prevent diversion to the black market of narcotic painkillers it supplied to retailers. Those settlements cost the company $163.25 million, documents show. Under the law, wholesale distributors such as McKesson must keep track of the billions of pills they ship through the supply chain and alert the DEA to signs that narcotics are being diverted to illicit-drug users and dealers.
The Post reported last month that McKesson was one of 13 companies it was able to identify that had run afoul of those laws and regulations, bringing enforcement action by the DEA.
Hall's four-page letter also noted an ongoing lawsuit filed by West Virginia's attorney general that charges the company with flooding the state — which has fewer than 2 million residents — with 100 million opiate doses in five years. He said McKesson should suspend a compensation system that provides bonuses and commissions to staff and managers based on the sales of the powerful painkillers while a committee of the board investigates.
Prescription narcotics have caused more than 165,000 overdose deaths since the turn of the century — a larger number each year than any street drug, including heroin. The number of overdose deaths has soared from 3,785 in 2000 to 14,838 in 2014.
Hall's letter claims that there are parallels between the damage to McKesson's reputation and the effect of the recent scandal at Wells Fargo, where some employees opened as many as 2 million accounts without customers' knowledge to reach sales targets. The company stripped then-chief executive John Stumpf of $41 million in stock awards in September. Stumpf resigned in October.